Oregon Attorney General Files Lawsuit Against Cryptocurrency Giant Coinbase
In a significant legal development, Oregon Attorney General Dan Rayfield has taken decisive action against Coinbase, a prominent cryptocurrency exchange in the United States. The lawsuit, lodged in the Multnomah County Circuit Court, accuses Coinbase of breaching Oregon Securities Law. The company is alleged to have facilitated the sale of unregistered cryptocurrencies to state residents, resulting in substantial financial losses for investors.
Allegations of Regulatory Misconduct
Attorney General Rayfield underscored the trust placed by Oregon consumers in Coinbase, asserting that the platform betrayed this trust by offering high-risk investments without proper scrutiny. “Our aim is to ensure accountability and safeguard consumers,” Rayfield emphasized. The complaint suggests that Coinbase functions as an exchange dealing in unregistered securities, often linked to heightened risks.
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The lawsuit accuses the platform of endorsing cryptocurrencies, facilitating transactions, and promoting various digital assets to Oregon residents without requisite regulatory oversight. Rayfield likened investing in cryptocurrencies without understanding the risks to undergoing a medical procedure without knowing the potential consequences.
According to the lawsuit, these alleged unregistered securities are susceptible to schemes such as pump-and-dump and fraud, potentially leading to severe financial losses for investors. A cited example involves the Internet Computer Protocol (ICP), identified by the Securities and Exchange Commission (SEC) as an unregistered security. Following its launch on Coinbase, ICP’s value plunged dramatically from $700 to $72 within a month, and it currently trades near $7, marking an astonishing decline of nearly 99%.
This legal action follows the SEC’s recent decision to withdraw its case against Coinbase and reassign the attorney previously handling it. Rayfield stressed the importance of state-level enforcement in light of insufficient federal intervention.
Response from Coinbase
In response, Paul Grewal, Coinbase’s Chief Legal Officer, publicly expressed his disagreement on social media platform X (formerly Twitter). He labeled the lawsuit a “copycat case” mirroring the SEC’s prior enforcement action against Coinbase, which was eventually dismissed.
Grewal criticized the lawsuit as a “politically motivated effort,” arguing that it misuses taxpayer funds and diverts attention from the pressing need for bipartisan digital asset legislation. He also noted perceived omissions in the Oregon AG’s complaint, claiming it overlooked key judicial rulings and seemed influenced by private law firms aiming to profit from the case.
Grewal affirmed Coinbase’s confidence in its legal stance and readiness to challenge what he described as an erroneous lawsuit. He concluded by assuring that the company’s business operations in Oregon would proceed without disruption.
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